Media Program News

February 28, 2013

Smartphone Ads That Work

A consumer is on his smartphone, skimming the headlines and checking movie times at his local theater. A car ad appears at the top of his browser screen. Is such a small ad, coming when his attention is divided, effective?

Topics: Marketing

This article originally appeared in Columbia Ideas at Work. 

A consumer is on his smartphone, skimming the headlines and checking movie times at his local theater. A car ad appears at the top of his browser screen. Is such a small ad, coming when his attention is divided, effective?

Advertisers are betting it is. Global spending on mobile advertising reached $8.4 billion in 2012 and is expected to soar to $36 billion by 2016. This growth is fueled by the rapid spread of Internet-connected mobile devices, as well as the increasing tendency for consumers to access websites on their phones. And despite alternatives such as text messages and location-based ads, an increasing proportion of mobile advertising comes in the form of display ads on smartphone web browsers, which — because of the size of smartphone screens — have a very limited capacity to convey information. In fact, many display ads include only a very short promotional message or slogan, or even just a logo.

Yet surprisingly, studies have shown that these ads can have a positive effect on consumers’ brand attitudes and intentions. Given the limitations, it might seem that these ads are most likely to be effective for products that command relatively little attention before a purchase is made — inexpensive, everyday items like pain relievers or cleaning products. However, new research by Miklos Sarvary, working with Yakov Bart of INSEAD and Andrew T. Stephen of the University of Pittsburgh, shows that the ads work best for utilitarian, “high-involvement” products — big-ticket items that receive a relatively high level of attention before a consumer decides to make a purchase, such as cars and electronics. And the ads work not by providing any new information but by reminding consumers of the information they already know about a particular product.

“A weak signal will be effective at reminding people of a purchasing decision only if the product requires high involvement,” Sarvary explains. “We know from psychology however, that the higher people’s motivation (for example, if the product is of high involvement) the more people tend to use rational decision making, relying on trade-offs. Moreover, rational decision making is more effective for utilitarian products. So if products are both important and utilitarian, the weak signals on mobile display advertising will have a stronger effect.”

In the case of car shopping, for example, a mobile display ad can be surprisingly effective at influencing a consumer’s opinion about a particular car model. “If you’ve been thinking about buying a car, you already have plenty of information in your mind about it,” Sarvary explains. “The ad’s strength is not adding new data, but reminding you of what you already know and making you think about the product again.”

It can take weeks or months before a consumer decides to make a high-involvement purchase like a car or an airline ticket. “During that time, you’re debating with yourself about which model of car you should buy or which airline you should choose,” Sarvary says. “And display ads that show up at random moments reinforce what you know about a particular brand.”

Companies can use these findings to predict whether their products are likely to benefit from mobile display ad campaigns. “If marketers are planning a multi-channel campaign, for example, it might help to launch the mobile display ads after the product has been advertised in other media,” Sarvary says. “That way, some awareness and information about the product has been generated, which can be easily triggered when cued with a mobile ad.”

The researchers studied data from more than 50 mobile display campaigns that reached about 40,000 US consumers from 2007 through 2010, involving a wide range of industries such as automobiles, packaged goods, health, and finance. It is the first study of its kind based on extensive field data.

“Digital advertising in mobile channels is experiencing explosive growth,” Sarvary says. “Since advertisers are shifting larger proportions of their budgets into this channel, it’s becoming even more important to have a detailed understanding of when these ads are effective.”

Miklos Sarvarycurrently a visiting professor, will join the Marketing Division later this year to become the faculty lead for the Media Program at Columbia Business School.



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